Two surveys suggest most Spokane residents are contemplating an exodus

May 5-Two different surveys this week came to virtually the same conclusion: Two-thirds of Spokane County residents and business owners are considering a move to another state.

The Association of Washington Businesses and Greater Spokane Inc. both released results of surveys that paint a troubling picture of the current business climate following a series of tax hikes in the Evergreen State.

According to the AWB survey, 24% of businesses are seeking to relocate out of state. Meanwhile, 55% of the business owners statewide, and 67% of those in Spokane County, are now considering a move out of the state in their personal capacity.

"It's tempting for lawmakers to dismiss this kind of report and to suggest that businesses won't really leave, but that would be a mistake," AWB President Kris Johnson said in a news release. "We are already seeing evidence of employers moving operations or moving their personal residence to other states, and we expect to see more in the coming years as plans that are being made right now are put into motion."

GSI's survey found that 59% of Spokane residents, and 68% of Spokane County residents, are actively considering moving out of the area, though notably this sentiment hasn't changed significantly from when the same question was asked last April.

Among those who did recently say they were actively considering moving away, 21% pointed to taxes as the main reason, followed by "government/leadership/politics" at 19% and "cost of living/housing" at 17%.

Steve Scranton, economist at Washington Trust Bank, said he has spoken to several clients who are considering a move after the state hiked its estate tax, which is paid on money left after someone dies.

Washington lawmakers increased the estate tax to 35% before it was pared back to a sliding scale of 10-20% starting July 1.

The state also has a 7% capital gains tax on the sale of investments that exceed $250,000 and the recently enacted millionaires tax that will add a 9.9% tax on households with wages that exceed $1 million starting in January 2028.

Asked about the two survey results showing two-thirds of Spokane-area folks contemplating a move, Scranton said he was not surprised.

"That, in one sense, is the logical economic response," he said. "The upper-income people are the most mobile."

But the exodus, if one truly occurs, is not exclusive to those who live in Washington.

"Nationally, people are leaving the West Coast and the East Coast. They are moving to Texas, Florida and the South," Scranton said. "It's a natural response. When you have these distortions within a state, people will reposition to a more advantageous state."

Scranton agreed with the AWB's Johnson's sentiment on the survey.

The "68% is not a number to be ignored," Scranton said.

The higher taxes suggest that Washington is not business friendly.

"Whether true or not," Scranton said, "that's clearly the image."

State Sen. Marcus Riccelli, D-Spokane, agreed that state lawmakers need to make a better case to constituents about their tax decisions.

He noted that he supported the millionaires tax, which wouldn't cost millionaire taxpayers until April 2029, because it also included a provision to eliminate Business & Occupation taxes, better known as B&O taxes, on 70% of businesses statewide. B&O taxes are levied against businesses' gross incomes.

"B&O taxes punish success," Riccelli said. "That's wrong, and we need to figure that out."

The millionaire tax would also provide benefits to working families, many of whom will never worry about capital gains taxes or even estate taxes.

"I will continue to be accessible and hear from business owners," he said. "I want folks to grow and thrive right here. I think affordability issues for businesses and constituents are really rough right now."

Riccelli put blame on most affordability issues squarely on the "broken" Washington, the District of Columbia.

"I do understand all the anxiety and concern in this uncertain economy," he said. "There are many reckless actions by the federal government that are resulting in higher fuel prices, and higher health care and the impact of tariffs on inflation. Working families are seeing the same cost increase that businesses are seeing."

As for the AWB survey, other findings, based on email responses from 407 business owners in the state last month, show that 72% of owners rate the state's tax burden as the top business challenge.

Only 7% rated the state's economy as strong or very strong, and some 22% said their businesses are growing, but another 46% predicted a recession in the next year.

Scranton, of Washington Trust, said proponents of the taxes would say that the state has created the environment that allowed those businesses to thrive.

"I think it's a valid statement," he said. "But businesspeople would counter that they also have contributed to the communities and the economy. They would say, 'We have to make a decision going forward and not in the past.' "

Riccelli said he would tell those same business leaders that an elimination of B&O taxes would have a greater impact than a new tax on about 211 constituents from his voting district.

"I want to work with individual business owners. With the elimination of the B&O taxes, many will see a more favorable business taxation," he said. "We are balancing that with health care, education and all the services that everybody relies on."

Reporter Emry Dinman contributed to this story.

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